If you are anything like me, there is nothing more satisfying and exhilarating than tearing off that final December calendar page and starting a fresh new year. For many businesses, the end of the calendar year is also a heady mixture of closing out the year (hopefully on a high note) and planning for the next high bar of goals and objectives. The end of the year is also when most companies end up stretching the last of their allotted marketing dollars, and look forward to starting the upcoming year with a brand new budget. If your company is in need of market research to improve or launch a new product, or keep updated on your customers or industry to plan your advertising, allocating a portion of your marketing dollars to research should happen during this time.
So how much of your marketing budget should you spend on market research? It depends on your company and your goals. According to the U.S. Small Business Association, most businesses allocate between 2-5 percent of their actual or gross revenues for marketing, and small businesses with revenues under $5 million should allocate 7-8 percent of their revenues to marketing. Startups may need to spend up to 20-30% of their total budget on marketing and advertising to jump start their brand awareness! In order to determine how much of your annual budget can and should go to market research, you can follow a few basic steps:
- Identify your objectives – Executives and potential users of any market research should be polled to understand what exactly they are hoping to learn. What is the information needed? Is it reactive or proactive? Will various users require different information to make planning decisions? Creating a matrix of each user’s needs can help ensure that you aren’t missing critical information once you’ve decided on a research report.
- Review the available market research – You have your matrix of informational needs, now compare it against the available reports for your industry. Most market research companies offer standard reports that cover an overall industry or category, but they also can provide minor customizations of existing reports, or fully custom reports. You may even be able to purchase individual sections of a standard report, paying for only what you really need. If you aren’t sure or don’t think what you need is on a standard report, contact your market research company for suggestions or an explanation of the available options and custom research services.
- Communicate your findings to decision makers - Depending on the scope and complexity of the market information needed, this may be as simple as notifying your manager or financial group, or it may require additional negotiation and prioritization of goals for the upcoming year.
Market research, like the rest of your marketing and advertising expenses, is an investment. It pays to spend wisely and make sure your money is providing what you need to be successful. Happy New Year!